Regulation 4 - Financial commitment by Indian entity by way of debt - Foreign Exchange Management (Overseas Investment) Regulations, 2022

4. Financial commitment by Indian entity by way of debt. An Indian entity may lend or invest in any debt instruments issued by a foreign entity subject to the condition that such loans are duly backed by a loan agreement where the rate of interest shall be charged on an arm s length basis. Explanation . For the purpose of this regulation, the expression arm s length means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.